Correlation Between Snap and Reka Industrial
Can any of the company-specific risk be diversified away by investing in both Snap and Reka Industrial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Snap and Reka Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Reka Industrial Oyj, you can compare the effects of market volatilities on Snap and Reka Industrial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Snap with a short position of Reka Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Reka Industrial.
Diversification Opportunities for Snap and Reka Industrial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Snap and Reka is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Reka Industrial Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reka Industrial Oyj and Snap is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Snap Inc are associated (or correlated) with Reka Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reka Industrial Oyj has no effect on the direction of Snap i.e., Snap and Reka Industrial go up and down completely randomly.
Pair Corralation between Snap and Reka Industrial
Given the investment horizon of 90 days Snap Inc is expected to generate 1.37 times more return on investment than Reka Industrial. However, Snap is 1.37 times more volatile than Reka Industrial Oyj. It trades about 0.15 of its potential returns per unit of risk. Reka Industrial Oyj is currently generating about 0.01 per unit of risk. If you would invest 886.00 in Snap Inc on August 31, 2024 and sell it today you would earn a total of 275.00 from holding Snap Inc or generate 31.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Snap Inc vs. Reka Industrial Oyj
Performance |
| Timeline |
| Snap Inc |
| Reka Industrial Oyj |
Snap and Reka Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Reka Industrial
The main advantage of trading using opposite Snap and Reka Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Reka Industrial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Reka Industrial will offset losses from the drop in Reka Industrial's long position.The idea behind Snap Inc and Reka Industrial Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Reka Industrial vs. Oma Saastopankki Oyj | Reka Industrial vs. Tecnotree Oyj | Reka Industrial vs. Tokmanni Group Oyj |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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